A slur for an ethnic group that does not exist.
A vague term used as a substitute for an actual ethnic slur with the sole purpose of upsetting or confusing the ignorant. Not to be used as a euphemism for a real slur, but simply to confuse those that don't realize that there is no actual ethnicity attached to "salthead."
Although originally coined to provoke overly P.C. hippies, its also fun to say to ignorant rednecks who may think you're actually insulting someone, and will join in.
Just take a cliche racist comment, add "salthead" in place of the slur and voila!

"No daughter of mine is going to marry a no good salthead!"
"Get a job, you lazy salthead!"
"Oh Christ, a family of saltheads just moved next door. There goes the neighborhood."
"Everyone knows that saltheads have {large/small} {body part}s."